Conning Taps Into Hot Investments By Partnering With Commercial-Mortgage Underwriter

As institutional investors look for better returns in a low-interest-rate environment, Conning has partnered with an Illinois-based lender and underwriter to allow its customers to invest in commercial-mortgage loans.

The commercial mortgage loans will be underwritten by Innovative Capital Advisors of Chicago and Hartford-based Conning will provide investment advice to its customers about how to integrate mortgage lending into their portfolios. The agreement was announced last week.

Commercial mortgage lending is difficult for institutional investors to access because of the costs of originating, underwriting and servicing loans, regulatory differences that vary state to state and a lot of work in due diligence to research each commercial property. It also requires a network of mortgage bankers.

In a low interest-rate environment, investors are looking for better returns and commercial lending has traditionally been attractive in providing a high reward, albeit with risk. The 2008 crash left some institutional investors holding debt on commercial property that went bankrupt, halted in mid-development or otherwise failed financially.

Investors are now buying commercial-mortgage bonds at the fastest pace since 2007, Bloomberg reported last week.

"Our new relationship with Conning enables us to offer commercial mortgage loans to their broad client base which will be of tremendous value to them in these very difficult low yield times," said Peter Mavrogenes, managing director and CEO of Innovative Capital Advisors. "The challenge now is to invest in strategies without assuming excessive risks. Properly done, commercial mortgage loans can substantially help that effort."

Conning, known for its insurance research, also provides investment management services and is a global asset manager with more than $86 billion in assets under management.

Conning's managing director and head of U.S. Business Development, Robert Miller, said investors will be able to diversify their portfolios "through participation in small, conservative, and carefully underwritten mortgage loans . . . and will continue to develop and seek out opportunities to provide insurers with attractive investment options in a continued low interest rate environment."